House panel weighs contracting reform legislation

By Elizabeth Newell Jochum

February 26, 2008

On Wednesday, a House subcommittee will hear testimony on three contracting reform bills, which would create a performance database, require disclosure of executive compensation and bar those with delinquent taxes, among other things.

The 2007 Contractors and Federal Spending Accountability Act (H.R.3033) -- co-sponsored by Rep. Carolyn Maloney, D-N.Y., and Rep. Edolphus Towns, D-N.Y., chairman of the Oversight and Government Reform Subcommittee on Government Management, Organization and Procurement -- would mandate the creation of a governmentwide database of information on contractor performance and misconduct. While many other such listings exist in the public and private sectors, supporters of Maloney's legislation say they are incomplete or inconsistent. The new structure would standardize contractor performance metrics and the way agencies submit that information, she said. Scott Amey, general counsel of the Project on Government Oversight, will be testifying at the hearing and said POGO strongly supports the bill. "We've been pushing since 2002 to provide more information to contracting officers to make well-educated contract award decisions," Amey said. "This provision is long overdue and necessary to keep risky contractors from receiving taxpayer dollars." Alan Chvotkin, senior vice president and counsel for the Professional Services Council, will testify in opposition to the bill. If there was any value in the legislation, he said, it would be in organizing existing data. But Chvotkin said he does not see how the information required by Maloney's bill would help contracting officers determine a company's level of reliability. The council is concerned that the bill fails to distinguish between minor contracting disputes and major investigations or give companies an opportunity to comment on data, such as inspectors general reports, which can include allegations against them. Maloney has introduced similar legislation in the past, but Amey anticipates more support this time around. The subcommittee also will review the 2007 Contracting and Tax Accountability Act (H.R. 4881), sponsored by Rep. Brad Ellsworth, D-Ind., which would withhold large contracts from companies that have failed to file tax returns or are significantly delinquent on payroll taxes. Ellsworth pointed out that agencies are not required to consider tax debts in contracting decisions and disclosure of taxpayer data is prohibited by law. An identical provision was enacted in the 2008 omnibus spending bill. Ellsworth and Sen. Barack Obama, D-Ill., who filed a companion bill, S. 2519, introduced their legislation in December to make the fix permanent. Chvotkin said Ellsworth's bill doesn't match up with the provision in the omnibus or with regulatory changes meant to achieve the same end. "We would support permanent legislation that addressed [the issue] consistently and uniformly across government." The third bill, the 2007 Government Contractor Accountability Act (H.R. 3928), sponsored by Rep. Christopher Murphy, D-Conn., would require contractors to disclose the names and salaries of their most highly compensated officers if more than 80 percent of the company's annual revenue comes from federal contracts and it holds contracts worth more than $5 million in any fiscal year. Murphy introduced the legislation soon after an Oversight and Government Reform Committee hearing in which he questioned Erik Prince, the chief executive office of Blackwater Worldwide, about the company's profits from wartime contracts. Prince refused to disclose his personal compensation. "The American taxpayers deserve to know what kind of profit these companies are making off of government contracts," Murphy said when introducing the bill. "Right now we have no way of knowing if American taxpayers are getting ripped off in this war." Chvotkin said a cap on the salaries of executives whose companies do business with the federal government already exists and "there's nothing in the disclosure of salaries that tells you anything about profitability." In fact, he finds the legislative history of this bill troubling. "It's directed at a single company in a unique set of circumstances. I don't know that there is a broad application across government," Chvotkin said. Amey said POGO "tepidly" supports the legislation. He believes that even privately held federal contractors should meet a higher standard when it comes to disclosure than companies that do business with the private sector. But Amey anticipates a healthy debate at Wednesday's hearing on the rights of private versus public companies. The subcommittee also will hear from witnesses on the Services Acquisition Advisory Panel's recommendations for improving procurement practices. Paul A. Denett, administrator of the Office of Federal Procurement Policy; John Hutton, the Government Accountability Office's director of acquisition and sourcing management; and Marcia Madsen, chairwoman of the advisory panel; will testify at the 10 a.m. hearing.